Frank Shao-Lin Hsieh v. Minister of National Revenue, [1980] CTC 2567

D E Taylor:—This is an appeal heard on May 12, 1980 at the City of Calgary, Alberta, against an income tax assessment for the year 1977 in which the Minister of National Revenue disallowed an amount of $2,400 claimed as support for non-resident relatives. In assessing, the respondent relied, inter alia, upon section 3 and paragraph 109(1 )(f) of the Income Tax Act, SC 1970-71-72, c 63, as amended.

History

The appellant came to Canada from Taiwan in 1972. He is an engineer, employed in 1977 by the Government of Canada. The respective relatives and amounts claimed were:

Contentions

For the appellant:

—The mother was infirm;

—The sisters and brother were students.

For the respondent:

—None of the appellant’s mother, sisters or brother were dependent upon him within the meaning of the Income Tax Act.

Evidence

From the appellant:

—There are six children in his father’s family.

—His father is regularly employed as a policeman in Taipei, with an annual salary of approximately $4,000 (Canadian) in 1977.

—The family lived in a government subsidized home.

—The children went to a private school, for which the tuition was about $40, to $50 per month per child.

—The father’s employment provided him with medical benefits.

—There was not sufficient funds from the father’s income in 1977 to buy the children “new” clothing for school.

— In 1977 the family did not have a car.

—The brother and sisters claimed in 1977 are now out of school, and the financial burden on the father is reduced.

—The general economic circumstances of the family in Taiwan has improved since 1977, with present prospects for some savings and perhaps the purchase of a home.

Argument

The position of the appellant was largely that he felt a clear responsibility, both personally and culturally, to assist his family, since there was no other way in which the father could have met the family requirements, particularly that of educating the children. He understood that the family could have “survived” without his assistance, but even the added income he provided gave them only a very modest life.

Counsel for the Minister pointed out that although the Minister was not totally satisfied with the evidence presented regarding the mother’s “infirmity”, that point would not be argued. Also, the Minister agreed that the two sisters and the brother were students at the times relevant, and that the funds in question did reach the family. The only point at issue which remained was that the recipients were not dependent upon the appellant for support in the Minister’s view. Such dependency for purposes of the Income Tax Act should not extend to the uses to which these funds were put, but should essentially be limited to the requirements of food, clothing and shelter. The members of the family were properly dependent upon the father, not upon the appellant, for support for these essentials.

Findings

The Board makes reference to the case of Aldo Diaz v MNR, [1979] CTC 2548; 79 DTC 535, (presently under appeal), in which the Board rejected the subjective and vague definitions for the word “dependent” which were proposed by the Minister, and asserted that considerable latitude must remain with the taxpayers in placing parameters around that word. It should not be the responsibility of a taxpayer to show that the relatives claimed “were virtually destitute”, neither should it be open to the Minister to require proof that “only funds needed for absolute survival should be permitted as a deduction”. Funds to allow for a minimum level of existence, either as the sole source or in augmenting other income of the relatives, prima facie, should deserve consideration for the deduction permitted. I do not regard it as the role of the Board to determine what that minimum level of existence might be under the varying comparative economic and social circumstances to be found in the country of origin of a specific taxpayer. Counsel for the Minister has put forward in this matter some general guidelines that have merit—the provision of food, clothing and shelter. Extending that thought, it would appear to me that where there is evidence that these were provided or providable outside of the remitted funds at issue, then the appellant would have a difficult time to establish that the recipients were dependent on him for support.

The Board recognizes the relationship and compassion of any taxpayer wishing to contribute to or subsidize his family so that the lot of his relatives is as good as possible. That route is open to a taxpayer to the maximum extent he himself determines. However, the difficulty arises that by claiming an exemption, such a taxpayer enjoins all the other taxpayers of Canada to participate in such subsidization. It is from that perspective that the Minister is completely within his rights to examine any such claim in a most meticulous fashion, particularly to insure that the circumstances warrant a conclusion that the relatives were “dependent upon the individual (taxpayer) for support”. (Paragraph 109(1 )(f) of the Act.)

In the Diaz appeal (supra), the two relatives (a mother and a father) claimed by the taxpayer were respectively 77 and 78 years of age, allegedly infirm, unemployed and with no known alternate and adequate source of income or support. Simply put, there was no one—individual, public or private—in the judgment of the Board who could be held responsible for the support of the recipients of the funds, other than the appellant himself. In the instant case, the father is fully employed, in adequate health, and reasonably young. Whether or not the father’s income is sufficient for the support of his family, as that is seen by the appellant, is not the question before the Board. There is no indication the father’s income was not sufficient for food, clothing and shelter, or that the father was incapable of providing these essentials. In the circimstances of this case, the mother, sisters and brother were dependent upon the father for support, they were not dependent upon the appellant. Even within the parameters described in Diaz (supra), the mere payments of funds to relatives does not accomplish that which is really sought by this appellant—to shift the burden of dependency for support away from the primary proper party—whether that party is an individual or the state.

Summary

The appellant has not demonstrated that he was required, because of specific circumstances, to take the place of the father as the source of support for the dependent relatives claimed. The evidence, in fact, would tend to show that the funds claimed provided a better life, with greater opportunity and fulfillment than could have been provided solely for the father. That is not a condition to the characterized as dependent for support under the Income Tax Act.

Decision

The appeal is dismissed.

Appeal dismissed.